Health Insurers Tackle Deluge of Changes

SHARON H. FITZGERALD

Reform Regulations Are Kicking In Already

Editor's Note: This story is the third in a three-part Medical News series examining some impacts of sweeping federal health-reform legislation signed into law in March by President Obama. The series looks at three groups of stakeholders – providers, patients and third-party payers. This month: the insurers.

Healthcare reform requires changes of all stakeholders, but probably none more so than third-party payers, usually portrayed as wearing the black hat in this ongoing drama. In fact, President Obama hasn't hesitated to cast insurers in the role of characters more worried about money than patient care.

Of course, insurance companies view the debate in a different light, and they have legitimate concerns they're watching carefully as regulations continue to be drafted.

"I think there will be lots of challenges around affordability," said Kris Haltmeyer, executive director of policy for the Blue Cross and Blue Shield Association. "We're certainly very supportive of the subsidies that will be provided to encourage people to buy coverage, but there are things in the new law that will increase the cost of health insurance, and we have to work with government to make sure they're implemented in a way that will make coverage most affordable." As an example, Haltmeyer pointed to the minimum package of benefits that Americans will eventually be required to purchase. What that package must contain has tremendous impact on how affordable it will be, he explained.

Robert Zirkelbach, press secretary for America's Health Insurance Plans, the national trade association representing nearly 1,300 health insurers, said, "Every single page of this legislation impacts our members one way or another." Thus, the task has been to minimize disruption to the health plans' members while implementing changes in a short timeframe. Some requirements for third-party payers take effect as early as September.

From the insurers' perspective, there's one overriding problem with reform legislation, and it has nothing to do with what's in the bill; rather, it has to do with what's not in it. "The big thing is the legislation doesn't do near enough to address the skyrocketing costs of medical care," Zirkelbach said. "Unless more is done to address that, healthcare reform will not be sustainable."

Regs Already Issued

On June 22, the departments of Health and Human Services, Labor and Treasury issued a slew of reform regulations packaged as a new Patients' Bill of Rights. According to a statement, the new regulations "crack down on the some of the most egregious practices of the insurance industry while providing the stability and the flexibility that families and businesses need to make the choices that work best for them." By Sept. 23, most insurers must stop imposing pre-existing condition exclusions on children, rescinding coverage based on an unintentional mistake on an application, and setting lifetime limits on coverage. Also, they must restrict their use of annual limits on coverage.

The new rules ensure that patients of most plans (some plans are grandfathered) may choose their primary care doctor or pediatrician from the plan's provider network and may see an OB-GYN without a referral. Furthermore, insurance companies can't require prior approval before seeking emergency care at a hospital outside the plan's network. Sept. 23 is the deadline for these rules, too. Many insurers and employers already have agreed to get a jump on the Sept. 23 deadline to allow children under 26 years old to stay or be added back to their parents' plan.

Certainly, these changes will affect some plans' bottom line, and there's more: Beginning in January, individual and small group insurers must spend at least 80 percent and large group insurers at least 85 percent of their premium dollars on direct medical care and efforts to improve care quality. Plans are required to refund patients the difference if they fall short. The idea, of course, is to limit spending on overhead, salaries and bonuses.

The Obama administration has been carefully watching payers to ensure that they don't drastically hike rates as implementation of reform begins. HHS offered states $51 million in grant funding to strengthen review of insurance premiums.

J. James Rohack, MD, a Texas cardiologist and former president of the American Medical Association, said some of these reforms "level the playing field, allowing the good plans to continue to be good and the plans that may have been created not to cover those who are sick but to maximize profit for stockholders reassess whether or not this is something they want to continue to be involved with." He pointed particularly to nationwide, for-profit insurers as culprits in the deterioration of patient-centered coverage.

In May, the AMA released a Health Insurer Code of Conduct Principles and called on U.S. health insurance companies to adopt practices consistent with the code. Principles deal with access to care, administrative simplification, cancellation of coverage, fair contracting, physician profiling, claims processing and more. "The bottom line is that our insurance code of conduct was our recognition as physicians that patients need to have better information to make a good choice on who's their insurer," Rohack said.

In answer to the AMA code, Zirkelbach said, "There's a shared responsibility between health plans and providers to make the healthcare system work at its best and as efficiently as possible. Health plans have pioneered innovative programs on disease management, care coordination, prevention and wellness. They have made critical investments in health information technologies to make the system work better." To illustrate, he pointed to pilot projects in New Jersey and Ohio that have created a portal where physician offices can interact with all the health plans they contract with – obviously, a simple and more efficient method for doctors.

Looking Ahead

Health plans already have their eyes on 2014, when health insurance exchanges kick in. Zirkelbach described the exchanges as "one-stop shopping" for individuals, families and small businesses to find the coverage that's right for them. Yet, there's little agreement on what this marketplace should look like and how it should operate.

BCBSA's Haltmeyer said the concept "certainly changes the paradigm" from consumers examining the options of one health plan at a time to consumers annually choosing policies or changes, similar to an employer-based model. BCBSA is urging the government to "start simply," with basic information and links to health plan sites. "I think the question mark is where does the portal go from there? Does it become more of an insurance shopping site or is it really just an educational tool to help people learn about coverage options? That really hasn't been settled at this point."

In the end, cooperation is the key ingredient if reform is to make a difference, Haltmeyer said. "We're going to have to work with government, and government's going to have to work with us to make health reform successful," he said. "I think that over time that will change the public discourse – when the emphasis is on partnership."